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EMC Corp (NYSE:EMC)
Beneish M-Score
-2.77 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

EMC Corp has a M-score of -2.77 suggests that the company is not a manipulator.

EMC' s 10-Year Beneish M-Score Range
Min: -3.74   Max: -1.85
Current: -2.77

-3.74
-1.85

During the past 13 years, the highest Beneish M-Score of EMC Corp was -1.85. The lowest was -3.74. And the median was -2.76.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of EMC Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 0.9874+0.528 * 1.0078+0.404 * 1.1224+0.892 * 1.057+0.115 * 0.9904
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0211+4.679 * -0.084-0.327 * 0.959
=-2.77

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $3,344 Mil.
Revenue was 5880 + 5479 + 6682 + 5539 = $23,580 Mil.
Gross Profit was 3654 + 3347 + 4224 + 3442 = $14,667 Mil.
Total Current Assets was $13,945 Mil.
Total Assets was $44,438 Mil.
Property, Plant and Equipment(Net PPE) was $3,606 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,765 Mil.
Selling, General & Admin. Expense(SGA) was $7,701 Mil.
Total Current Liabilities was $9,890 Mil.
Long-Term Debt was $5,494 Mil.
Net Income was 589 + 392 + 1022 + 586 = $2,589 Mil.
Non Operating Income was -31 + -40 + -153 + -29 = $-253 Mil.
Cash Flow from Operations was 1254 + 1338 + 2190 + 1792 = $6,574 Mil.
Accounts Receivable was $3,204 Mil.
Revenue was 5614 + 5387 + 6030 + 5278 = $22,309 Mil.
Gross Profit was 3509 + 3298 + 3890 + 3288 = $13,985 Mil.
Total Current Assets was $17,174 Mil.
Total Assets was $44,398 Mil.
Property, Plant and Equipment(Net PPE) was $3,291 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,588 Mil.
Selling, General & Admin. Expense(SGA) was $7,135 Mil.
Total Current Liabilities was $10,509 Mil.
Long-Term Debt was $5,519 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(3344 / 23580) / (3204 / 22309)
=0.1418151 / 0.14361917
=0.9874

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(3347 / 22309) / (3654 / 23580)
=0.62687705 / 0.62201018
=1.0078

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (13945 + 3606) / 44438) / (1 - (17174 + 3291) / 44398)
=0.60504523 / 0.53905581
=1.1224

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=23580 / 22309
=1.057

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(1588 / (1588 + 3291)) / (1765 / (1765 + 3606))
=0.32547653 / 0.32861664
=0.9904

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(7701 / 23580) / (7135 / 22309)
=0.32659033 / 0.31982608
=1.0211

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((5494 + 9890) / 44438) / ((5519 + 10509) / 44398)
=0.3461902 / 0.36100725
=0.959

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(2589 - -253 - 6574) / 44438
=-0.084

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

EMC Corp has a M-score of -2.77 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

EMC Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.92491.02971.0431.14970.86820.99281.00450.97221.07681.0516
GMI 0.88980.95311.01370.97250.98611.0010.93660.96930.96841.0077
AQI 1.05730.86181.06980.83831.01811.13871.14640.96271.03850.9113
SGI 1.31951.17431.15431.1861.12440.94281.21311.17591.08531.0694
DEPI 0.82851.03191.06790.91550.92490.99051.03020.94551.02181.01
SGAI 1.03720.9791.08151.01411.04591.05920.96421.02510.9960.9797
LVGI 1.05051.13461.69210.92060.97520.89460.98871.00110.88881.3936
TATA -0.0895-0.0752-0.0608-0.0832-0.0943-0.0839-0.0846-0.0886-0.0878-0.0824
M-score -2.76-2.77-2.78-2.63-2.94-2.85-2.64-2.81-2.71-2.91

EMC Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.9681.00451.08511.07690.97411.01230.87341.05161.01060.9874
GMI 0.96550.95510.96260.96830.97740.99320.99661.00781.00841.0078
AQI 0.98511.00521.00921.03851.03290.89390.90510.91130.99131.1224
SGI 1.15581.12971.10021.08531.07381.06441.06171.06951.05941.057
DEPI 0.96520.96760.98341.02181.01921.02621.0341.011.01180.9904
SGAI 1.02311.01611.01190.99610.99210.98950.99180.97950.99851.0211
LVGI 0.86260.86790.85550.88880.98841.35961.36541.39361.29020.959
TATA -0.1018-0.0976-0.0969-0.0863-0.0864-0.0737-0.0823-0.0824-0.0817-0.084
M-score -2.83-2.80-2.74-2.70-2.83-2.92-3.08-2.91-2.89-2.77
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